Required: With respect to MFRS 136, Impairments of Assets, calculate the impairment loss for the machine for the year ended 31 December 2023. Show relevant workings.
Coco Sdn Bhd has a year end of 31 December and operates a factory which makes
ceramic tiles. It purchased a machine on 1 July 2020 for RM80,000 which had a
useful life of ten years and is
in the years of acquisition and disposal. The machine was revalued to RM81,000 on
1 July 2021. There was no change to its useful life at that date. A fire at the factory
on 1 October 2023 damaged the machine leaving it with a lower operating capacity.
The accountant considers that Coco Sdn Bhd will need to recognise an impairment
loss in relation to this damage.
The accountant has ascertained the following information at 1 October 2023:
i. An equivalent new machine would cost RM90,000.
ii. The machine could be sold in its current condition for a gross amount
of RM45,000 with a dismantling cost of RM2,000.
iii. In its current condition, the machine could be used for three more years
which gives it value in use of RM38,685.
Required:
With respect to MFRS 136, Impairments of Assets, calculate the impairment
loss for the machine for the year ended 31 December 2023. Show relevant
workings.
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)